Tencent Holdings on Friday began charging users who pay their credit card bills via the "Card Repay" service within WeChat Wallet, a move that experts say sends a signal that free-of-charge services within the mobile payment sector are soon likely to come to an end. Cost pressure is the major reason for WeChat's new service fee request. However, it seems that the requirement will not significantly affect users. With the fast growth of the domestic mobile payment sector, China's online payment platforms will continue strengthening their efforts to offer top quality services and seeking expansion within the global market in the future.
Starting Friday, domestic Internet titan Tencent Holdings began charging users in China for the use of the "Card Repay" service that is featured in the built-in digital wallet service of WeChat, Tencent's popular mobile messaging app.
But this is not the first time WeChat has requested a service fee for the use of one of its features.
In March 2016, Tencent announced it would begin charging users in China to transfer money from their WeChat Wallets to their bank accounts.
With WeChat now acting as one of the two leading payment tools in China's mobile payment sector - the other one being Alipay - its decision to start charging for the use of its Card Repay service, which allows people to pay their credit card bills through the app, is causing some unease among users.
Alipay is the third-party payment tool backed by China's Alibaba Group Holding.
Indeed, the announcement from WeChat has raised some interesting questions: Will the era of free credit card bill repayment via third-party platforms soon come to an end? What would be the reasons behind that chapter close?
Terms and conditions
On November 7, WeChat released a notice explaining the new terms and conditions for the use of the Card Repay feature in WeChat Wallet.
If a user pays back a monthly amount of 5,000 yuan (6) or more, WeChat will charge them 0.1 percent of that amount, while for transactions under the 5,000 yuan threshold, there will be no charge.
Regardless of how many WeChat accounts or credit cards a person owns, the rule applies for each person rather than each account or bank card; if a user owns several WeChat accounts and several credit cards linked to Wallet under the same identity card, the 5,000 yuan free-of-charge quota will be shared across all accounts on a per person basis.
Furthermore, when a user pays a bill exceeding the free-of-charge threshold, they will automatically be charged for the service fee.
But using mobile payment platforms is not the only option for those paying credit cards bills. Now that WeChat has begun charging users to use the Card Repay service, WeChat Pay could end up losing customers.
The social networking giant has offered the same reason for the decision to charge for the use of Card Repay as it did for the decision to charge for Wallet-to-bank transfers last year: cost pressure.
WeChat currently uses Tenpay, Tencent's online payment platform, to enable users to pay their credit card bills. Here, Tenpay is charged by banks for each transaction made through WeChat.
Initially, the free services provided by those platforms attracted plenty of users, but as user and transaction volume increased over time, operation costs were needed to cover the capacity, said Fu Yifu, an expert from the Suning Finance Research Institute.
But Fu added that WeChat's decision to add a service fee to the Card Repay feature will not have that much of an impact on users.
According to an industry development report on Chinese bankcards released in April, the average monthly consumption of about 71 percent of bankcard holders was no more than 50 percent of their monthly salaries. Most bankcard holders' spending via credit cards does not surpass 5,000 yuan, according to the report.